4/24/2025

Mediobanca Scores Significant Victory in Fight for Control of Generali

Financial Times (04/24/25) Borrelli, Silvia Sciorilli; Harris, Lee

Generali (G) shareholders overwhelmingly backed Chief Executive Philippe Donnet for another three-year term, a significant victory for the insurer’s largest shareholder Mediobanca with wider implications for Italian politics and finance. Mediobanca’s slate of board candidates secured 52% of the vote, giving them all 10 of the seats they put forward. The minority list proposed by construction tycoon Francesco Gaetano Caltagirone only secured 37%, which translated to just three seats. The defeat for Caltagirone, the third-largest investor in Generali, and an ally of Italian Prime Minister Giorgia Meloni, is the second time that the billionaire’s ambition to overhaul the management of Italy’s biggest insurer has been thwarted. Donnet also successfully defended his seat against a challenge from Caltagirone in a 2022 management fight, in which Caltagirone was backed by Generali’s now second-largest shareholder Delfin, the holding company of late Italian billionaire Leonardo Del Vecchio. Caltagirone and Delfin are together part of a web of crossholdings in Italian finance, where developments at one company can have implications for control of another. The billionaires are currently supporting a hostile attempt by Monte dei Paschi di Siena to take over Mediobanca. The show of support for Mediobanca at the Generali meeting strengthens the Milanese bank’s hand in its efforts to fight off the hostile bid. The vote was further complicated by the presence on Generali’s shareholder register of UniCredit (UCG), which is currently attempting to complete its own domestic takeover of Banco BPM (BAMI). UniCredit, which had rapidly built a 6.7% stake in Generali ahead of the meeting — of which only 5% had been disclosed before Thursday — sided with Caltagirone. By supporting Caltagirone, UniCredit indicated that it was seeking to appease Italy’s government amid tensions over its attempted takeover of BPM. Last week, the Italian government imposed stringent requirements on the BPM deal, including a specific loan to deposit ratio for the next five years and a full Russia exit within nine months, which threatens to derail the transaction. UniCredit said this week its bid was in limbo as it seeks to clarify the details of the prescriptions with Rome. The Italian government retains a stake in MPS, which it bailed out in 2017, and has been keen to use the lender as a vehicle to create a strong third competitor to rival Intesa Sanpaolo and UniCredit domestically. Last week MPS shareholders, which also include Caltagirone and Delfin, overwhelmingly backed chief executive Luigi Lovaglio’s proposed acquisition of Mediobanca. If the bid were to succeed, MPS would end up controlling Mediobanca’s 13% stake in Generali. Although Lovaglio told a London conference in March the stake was not “crucial” to his plan to create a third large domestic banking group, analysts have said the deal has little industrial rationale. Critics have suggested it is ultimately aimed at helping Caltagirone seize control of the insurance group after failed bids to unseat Donnet.

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4/24/2025

Autodesk Announces Appointment of Two Independent Directors

PRNewswire (04/24/25)

Autodesk, Inc. (ADSK) today announced that it will appoint Jeff Epstein and Christie Simons to its Board of Directors in connection with a cooperation agreement with Starboard Value LP. Epstein and Simons will serve as non-voting observers on the Board until Autodesk's 2025 Annual Meeting of Stockholders on June 18, at which point they will become full voting members upon their appointment to the Board. Following the Annual Meeting, the Autodesk Board will be comprised of 12 directors, 11 of whom are independent. "Jeff and Christie are both exceptional leaders who bring a wealth of technology, finance and audit expertise," said Stacy J. Smith, Chairman of the Autodesk Board of Directors. "Jeff's proven leadership and oversight of financial operations and extensive public board service, coupled with Christie's deep experience advising global technology companies, will further strengthen the skillset of our Board. Their insights will be valuable as we continue to execute our industry cloud, platform and AI strategies to deliver strong business performance and create shareholder value. We are pleased to add Jeff and Christie as part of our ongoing board enhancement and to have reached a constructive agreement with Starboard, which we believe is in the best interest of Autodesk shareholders." "We invested in Autodesk based on our belief that it is a pioneer in design software with an opportunity to improve profitability and create significant value. We appreciate the constructive dialogue we have had with the Board and management team, and we are excited about the appointment of Jeff and Christie to the Board," said Jeff Smith, Managing Member, Chief Executive Officer, and Chief Investment Officer of Starboard. "Jeff and Christie will bring valuable perspectives to Autodesk's Board, helping oversee the Company's strategy to drive enhanced profitability. We look forward to our continued engagement with Autodesk's Board and management team towards our collective goal of long-term shareholder value creation." Autodesk and Starboard have entered into an Information Sharing and Discussion Agreement to facilitate ongoing collaboration towards the goal of driving sustainable value creation for all shareholders. In addition to the Board appointments, as part of the cooperation agreement, Starboard will withdraw its director nominees and has agreed to customary standstill, voting and other provisions. The full agreement will be filed as an exhibit to a Form 8-K with the SEC. Jeff Epstein is an Operating Partner and Head of Corporate Development at Bessemer Venture Partners, where he leads the CFO Council and advises portfolio companies across Bessemer's $20 billion portfolio on finance and strategy. Christie Simons has over 30 years of experience serving global technology clients, with significant audit expertise.

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4/24/2025

Independent Directors of Phillips 66 Issue Letter to Investors and Their Stewardship Teams

Business Wire (04/24/25)

Phillips 66 (PSX) today sent a letter from the Independent Directors of the Board to the Company’s shareholders and to independent proxy advisors, particularly those involved in assessing corporate governance topics. "Due to the unique nature of shareholder engagement in 2025 and our concerns with the agenda Elliott is pushing," the letter begins, "this letter is written directly to the stewardship teams, proxy advisers and all shareholders who prioritize strong corporate governance. This letter is intended to highlight critical areas for consideration that uniquely pertain to corporate governance, independence, and transparency. It is our strongly held view that two core tenets of best-in-class corporate governance are transparency and independence. Transparency allows shareholders to make informed decisions with full, complete, and straight-forward information. Independence ensures that a Board is impartial, unbiased, and objective in its pursuit of protecting the interests of all shareholders. We have been surprised and concerned by the actions taken by Elliott in pursuit of its campaign to break-up Phillips 66. These actions, in our view, reveal a concerning disregard for good corporate governance, raise important questions of independence and demonstrate an alarming pattern of opaque disclosure." The letter expresses concern over Elliott’s expectation of director loyalty. "Elliott is seeking to replace Bob Pease, a Board member it supported only one year ago. Does this sudden switch in support, and Elliott’s own acknowledgment of its effort to have one-on-one conversations with Bob during the time he has been on our Board, suggest an expectation of loyalty to the activist and its thesis instead of fair evaluation of what is in the best interest of all shareholders? Elliott, who is compensating its purportedly independent nominees, denied Phillips 66 access to those nominees for interview and evaluation, despite multiple attempts from Phillips 66. In fact, one of Elliott’s nominees told representatives of Phillips 66 that he was instructed not to engage directly and instead referred the Board to Elliott itself. Does this action further reveal an expectation of loyalty rather than true independence? Elliott’s competitive interests merit careful attention." The letter also notes that on Elliott's recent podcast episode, John Pike confirmed that the same Elliott professionals on their energy team invest in public equities and private situations. "At what point does pursuit of control of a company while trying influence the strategy of a direct competitor raise conflicts of interest concerns? Has Elliott adequately disclosed this competitive position to Phillips 66 shareholders? Should shareholders have legitimate concerns about how Elliott’s interests may differ from those of other Phillips 66 shareholders? Elliott and affiliated parties have provided misleading, incomplete disclosure." The letter continues: "As you know, we are fully committed to declassifying the Board so that each of our directors is up for election each year. Our last attempt to do so received approval from 73% of outstanding shares. With the attention this annual meeting is receiving, we are hoping that voter turnout will be higher than ever to achieve this important governance milestone. But unlike Elliott, we want to do so legally, completely and without subjecting the Company to litigation and reputational harm. Elliott is asking us to devise a slipshod workaround to declassify the Board in a de facto manner, without obtaining the required stockholder vote to do so. Put simply, if implemented, Elliott’s annual resignation proposal would contravene Delaware law, our Company’s charter and by-laws and our Board’s fiduciary duty to shareholders. Some resignation policies are acceptable, but not those with the specific purpose of evading a corporate charter. We will not establish the dangerous precedent of conveniently disregarding and circumventing our fundamental governing documents." The letter also claims that Elliott’s lawsuit "further exhibits its lack of transparency and preference for theatrics over engagement."

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4/24/2025

Elliott Wants BP's Green Architect Out

The Times (London) (04/24/25) Gosden, Emily

Elliott Management  is pushing for the removal of BP Plc's (BP) head of strategy but not its chief executive. The hedge fund is understood to be unhappy at the continued presence in BP's senior leadership team of Giulia Chierchia, who is the oil giant's executive vice-president for strategy, sustainability and ventures. The former McKinsey consultant was hired under Bernard Looney, the former chief executive, in 2020 and was seen as one of the key architects of BP's push into green energy, which it has now largely reversed after prolonged underperformance in its share price. Looney sought the advice of McKinsey in drawing up his strategy before hiring Chierchia to “ensure that sustainability is embedded at the top of BP and provide a single group-wide approach to strategy and capital allocation.” Chierchia spoke in 2020 of how Looney convinced her to join on the basis that BP would not compromise its commitment to cutting emissions. “We will make choices, and those choices will be low carbon,” she said at the time. BP has now scaled back low-carbon spending to less than $1 billion a year, compared with a previous goal to increase it to $5 billion. “The strategy team overall can be significantly curtailed, given the complete failure,” a person familiar with Elliott's thinking said. Elliott has amassed an interest of just over 5% in BP, making it the oil giant's second largest investor. The stake is the hedge fund's largest ever investment in Europe. It is understood that Elliott is not pushing for the removal of Murray Auchincloss, BP's chief executive, despite its dissatisfaction with his performance. Auchincloss was Looney's chief financial officer for most of the push into green energy but in February revealed a “fundamental reset” of BP's strategy to refocus on fossil fuels and slash green spending. Elliott is understood to regard Auchincloss's plans as unambitious and lacking in urgency and is pushing for further spending cuts across the board and a complete exit from renewable power. However, it believes it would be unhelpful for BP to change its chief executive at the same time as it searches for a new chairman. Helge Lund announced his plans to retire shortly before BP's annual general meeting at which a quarter of investors voted against his re-election. Elliott is also understood to be preoccupied with the poor performance of BP's “downstream” refining and marketing operations since the departure of the former divisional head Tufan Erginbilgic, now the toast of investors as the chief executive of Rolls-Royce (RYCEY). “The downstream operations were in excellent shape under Tufan; last year they barely made any profit,” the person familiar with Elliott's thinking said, adding it was “not clear who should be held responsible for the poor performance.” Responsibility for the downstream division is split between Gordon Birrell, head of production and operations, and Emma Delaney, head of customers and products.

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4/23/2025

Airlines Southwest to Cut Flights this Year, Pulls Guidance, Citing ‘Macroeconomic Uncertainty’

CNBC (04/23/25) Josephs, Leslie; Luhn, Michele

Southwest Airlines (LUV) will reduce its capacity in the second half of the year, as more signs point to weaker domestic bookings this year. The airline said it expects unit revenue to be flat to down as much as 4% in the second quarter from a year earlier. Southwest said it is not reaffirming its guidance for earnings before interest and taxes for 2025 and 2026. “Amid the current macroeconomic uncertainty, it is difficult to forecast given recent and short-lived booking trends,” Southwest said in a securities filing. United Airlines (UAL) and Delta Air Lines (DAL) earlier this month announced plans to scale back their domestic capacity in the second half of the year. Delta also pulled its full-year forecast while United provided two forecasts, calling the U.S. economy “impossible” to predict. The carrier’s first-quarter earnings and revenue beat analysts’ expectations. The carrier has laid out dramatic changes to its more than half-century-old business model over the past year, increasing the channels in which it sells its fares to sites such as Expedia, to launching a plan to end its open-seating model for assigned seats and introducing restrictive basic economy tickets. Next month, it plans to start charging many travelers to check their luggage, ending its decades-old policy of allowing customers to check two bags for free. Southwest has been under pressure from Elliott Investment Management, which took a stake in the airline and won board seats last year, to raise revenue to better compete with rivals that have premium seats, lounges and international networks. “We are seeing positive results on recently rolled out initiatives,” CEO Bob Jordan said in an earnings release. In the first quarter, Southwest posted a net loss of $149 million, an improvement from a loss of $231 million a year ago, and revenue of more than $6.4 billion, which was up 1.6% from a year ago. Adjusting for special items, Southwest reported a loss of 13 cents per share for the three months that ended March 31.

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4/23/2025

Glass Lewis Says Director Should Pay Price for Climate Strategy Failures

The Australian (04/23/25) Thompson, Brad

An influential proxy adviser has taken aim at Woodside Energy (WDS) over shareholder concerns about its climate strategy, and decided independent director Ann Pickard should pay the price as the company prepares for another annual meeting marked by a big police presence. Glass Lewis has recommended shareholders vote down Pickard’s re-election to the Woodside board at the company’s AGM in Perth on May 8. “Given the ongoing pattern of significant shareholder opposition to the company’s climate strategy, we would expect a more robust response from both management and the board,” Glass Lewis said in its proxy paper on Woodside. “At present, we are not convinced that the response meets this standard.” Oil and gas producer Woodside has faced significant shareholder backlash and protests that have led to arrests at its recent annual general meetings in Perth, and another big police contingent is expected this year. The results of the federal poll where the Greens and Teals may end up holding the balance of power will be known heading into the meeting. Labor’s delay in approving an extension of the NorthWest Shelf gas project have been a major election issue, particularly in WA. Woodside boss Meg O’Neill said on Wednesday that she looked forward to some certainty on the North West Shelf. “As Australia approaches a federal election, it is encouraging to see both major parties recognizing the essential role of gas in supporting national prosperity and a stable energy transition,” she said. “We look forward to certainty for ongoing operations at the North West Shelf beyond 2030, to enable it to support thousands of direct and indirect jobs, billions of dollars in taxes and royalties, and secure future gas supply to WA.” Glass Lewis has recommended a vote in favor of five other resolutions to be put to the AGM, including the re-election of directors Ben Wyatt and Tony O’Neill, who have been targeted by a “vote no” campaign. Glass Lewis noted it had reservations about the implementation of so-called Say on Climate votes based on the view that setting corporate strategy is the responsibility of the board, not shareholders. “However, when a company chooses to place its strategy up for shareholder approval, we would expect that this not be a hollow gesture and that a company would seriously and thoroughly evaluate any dissent to the strategy and effectuate changes that are responsive to shareholder concerns,” it said. “In this case, we do not consider the company’s enhanced disclosure alone to be a sufficient response to the level of dissent expressed.” Woodside asked shareholders to approve its climate transition action plan and progress report at last year’s AGM, but only 41.6% voted in favor. The result saw Woodside become the first company globally to receive majority opposition to its Say on Climate vote. Glass Lewis said the 2024 vote continued a trend of shareholders expressing significant concern about Woodside’s climate strategy and its response to feedback. The Australian Centre for Corporate Responsibility opposes the re-election of all three directors, saying the board has collective responsibility for Woodside’s failure to address shareholder concerns reflected in the 2024 vote against the climate transition action plan. Woodside said it was concerned that Glass Lewis had overlooked specific information the company published on its climate actions. “Woodside has followed these concerns up with Glass Lewis, as these omissions form the basis of the recommendation against Ann Pickard, which we believe to be unfair and not reflective of Woodside’s actions in response to shareholder feedback on climate change,” a company spokesperson said. On Wednesday, Woodside reaffirmed its 202-25 production and capital expenditure targets while reporting strong gains in quarterly production and sales versus a year ago.

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4/23/2025

Sullivan & Cromwell Bolstering Activism Practice With New Hires

Wall Street Journal (04/23/25) Thomas, Lauren

Sullivan & Cromwell is beefing up its practice that defends corporations against shareholder activist engagements. The prestigious New York-based law firm is set to hire two top activism defense lawyers, Lawrence Elbaum and Patrick Gadson, from Vinson & Elkins, according to people familiar with the matter. The race for talent at Wall Street’s leading law firms continues apace, particularly in the activism area. Public companies navigating President Trump’s trade war and other policies are eyeing fresh legal strategies to insulate themselves from activists on the prowl. Paul, Weiss, Rifkind, Wharton & Garrison earlier this year hired Carmen Lu from Wachtell, Lipton, Rosen & Katz to work on activism defense situations. White & Case also recently hired a slew of partners from Cadwalader, Wickersham & Taft, including Richard Brand, known for his work around activism matters. Elbaum joined Vinson & Elkins in 2015 and led the build-out of a practice focused on activism defense assignments. Gadson joined the firm in 2017 and eventually became co-chair of that practice. Some of their recent assignments have included helping Southwest Airlines (LUV) in its engagement with Elliott Investment Management, and Yelp Inc. (YELP) in defending against TCS Capital Management. At Sullivan & Cromwell, the duo is also expected to help on contested deal situations, the people familiar with the matter added. Elbaum and Gadson are expected to join the firm's New York office as partners by next month, the people said.

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4/23/2025

Funds Get in Front of their Proxy Ballots

Reuters (04/23/25) Kerber, Ross

Most asset managers don't say how they plan to vote at corporate annual meetings. That leaves activists with small share holdings but big social agendas to do much of the pre-meeting talking on contentious issues. No drama can be a good thing for many investors, especially at a time when top fund firms face pressure from Washington to leave portfolio companies alone. But academics have suggested investors might claim more influence if they were to make their voting intentions public before the events. It's an intriguing practice that seems to be working for a few investment firms. Morgan Stanley's (MS) Calvert responsible-investment unit, for instance, typically posts explanations about its votes 72 hours ahead of a meeting. Other institutional investors often will ask Calvert about its voting plans, executives said. "Managers pay attention to how other managers describe what they're doing," said John Wilson, Calvert's executive director for corporate engagement. In addition, privately held Neuberger Berman started announcing its votes five years ago. Since then it has issued papers at 183 companies covering everything from executive pay votes to corporate lobbying. The firm's stewardship director Caitlin McSherry said in an interview the bulletins aim to show clients its thinking rather than making them wait until August for official filings that only show if the firm voted for or against a proxy measure. The notes "elevate the topics into a real-time discussion," she said. Calvert's explanations for its votes can be as blunt as any missive from a proxy adviser; Neuberger hardly comes across as a firebrand in the notes, which cover just a fraction of its holdings. As an active investor with $508 billion under management, it is easier for Neuberger to pre-announce its votes than it is for the giant passive fund managers like BlackRock (BLK) or Vanguard as they face new regulations on their corporate engagements. A few other public-sector investors also disclose their votes ahead of time including Norway's sovereign wealth fund and the California Public Employees' Retirement System, which weighed in ahead of various contests like at Exxon (XOM) last year. James McRitchie, a private investor who has called for more early vote disclosures as a way to help other shareholders make decisions, said he would prefer all asset managers disclose all their voting, but that he liked even the limited disclosures from Neuberger as a signal to other investors about how the firm views its holdings. "If I were an activist going after a company, it would give me a sense of Neuberger being approachable," McRitchie said.

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